Coinbase, the largest US cryptocurrency trading service, has made an entry into the Japanese market and set to commence operations.
Backstory to Coinbase entering the Japanese market
In March 2020, Coinbase joined as a member of the Japan Virtual Currency Exchange Association, a self-regulatory organization approved by the FSA. The company has been hinting at an entry into Japan for years and finally began making moves by engaging in a hiring spree across the country’s capital of Tokyo after joining the association.
Coinbase announced on the 18th of June that its Japanese subsidiary has registered with the Financial Services Agency (FSA), Japan’s financial watchdog, as a cryptocurrency asset exchange company. The company stated that they will proceed with preparations for the start of the service in Japan.
Just to start, Coinbase Japan announced that they will be offering and handling five major types of crypto assets, which are Bitcoin (BTC), Ethereum (ETH), Stellar Lumens (XLM), Litecoin (LTC), and bitcoin cash (BCH). More cryptocurrencies are expected to be added once Coinbase’s registration has been finalized.
Coinbase CEO, Brian Armstrong has made it a point to expand its crypto-asset trading service business for individuals and institutional investors mainly in North America. The company also wants to expand its earnings and capacity in the asset management business. In April 2021, Coinbase was listed directly on the US Nasdaq market, becoming the first cryptocurrency exchange to go public. Since the listing, the company has been actively promoting merger acquisition in the cryptocurrency asset area.
What this means for Coinbase
In contrast to the North American market, institutional demand has been absent in Japan. More than 20 exchanges such as Coincheck, BitFlyer, Bitbank and GMO already active in the Japanese market have retail investors as their target market, as high demand for cryptocurrency-related services comes from them.
It will be a tough market for Coinbase to compete in as it can be assumed that the majority of the investors are already involved with one of the already established exchanges in the country. Coinbase may need to switch its market focus to institutional investors so as to get a foot into the Japanese market.
Nao Kitazawa is the president of Coinbase Japan and attention will be focused on how Coinbase, which is known for building a comprehensive trading service for cryptocurrency assets, will gain market share in an already highly competitive Japanese market.